The date when the Macau casino market can get back to the sort of levels seen before the Covid-19 pandemic is “slipping by the day,” said Lawrence Ho Yau Lung (pictured in a file photo), the chairman and chief executive of casino group Melco Resorts and Entertainment Ltd.
He appeared to link that with the time it was taking for travel to normalise between Macau and mainland China. As of Thursday Macau had gone 36 days without a case of Covid-19.
Mr Ho also said the firm remained committed to getting a casino licence in Yokohama, Japan, and added he could not “speculate” why Las Vegas Sands Corp, also a rival in the Macau market, “is not pursuing the opportunity” of a casino in Japan.
He made the comments on his firm’s first-quarter earnings call on Thursday. The group made a loss of US$364.0 million, compared to a net profit of nearly US$120.1 million in first-quarter 2019.
Regarding Macau market recovery, “we mentioned the fourth quarter  in our earlier call. It’s still around there, but it’s slipping by the day in my opinion,” he told investment analysts. “Everything depends on the border and when that gets opened up,” he added.
The entrepreneur also expressed frustration that the timing of when arrangements for travel between Macau and mainland China might normalise had got caught up in travel-restriction issues linked to Hong Kong.
During the call management mentioned it had brought down its daily Macau operating costs from about US$3 million before Covid-19, to US$2.5 million and down again to US$2.2 million.
Geoff Davis, the chief financial officer, clarified that this was not “burn rate” but “operating expenses”.
He said about 75 percent of the savings were “volume related” – i.e., lower costs due to lower levels of business – with the remainder being “management initiatives”.
His boss Mr Ho had earlier mentioned that “a few of our management staff have unfortunately departed, but this will allow Melco to emerge as a leaner, more efficient company when demand returns”.
Mr Davis stated: “As we come back into a more normalised revenue environment, we do anticipate some meaningful savings and meaningful positive impact on the margin.”
The CFO said to achieve break-even level in Macau earnings before interest, taxation, depreciation and amortisation would require a “revenue recovery of about 35 percent” relative to pre-crisis levels.
Manila, Studio City, Cyprus
At the group’s City of Dreams Manila operation in the Philippines – which is currently closed due to quarantine measures imposed by the government there – daily operating expenses had come down to about US$300,000, from “closer to around US$400,000″ pre-Covid-19. About 90 percent of the reduction was “volume related”, said Mr Davis.
The firm said it was still waiting for guidance from the local gaming regulator as to when the property might be able to reopen, given that the enhanced community quarantine had now been modified for Manila.
Mr Davis said the suspension of the group’s quarterly dividend announced in the quarterly results would conserve “about US$80 million” of capital per quarter.
Mr Davis also said the group had US$1.2 billion in cash on hand as of March 31, with its liquidity “further strengthened” by the US$355 million of proceeds from the sale of its shares in Australian casino operator Crown Resorts Ltd, albeit at a 37 percent discount.
The CFO noted Melco Resorts had US$100 million in capital expense in the first quarter, and planned a further US$500 million this year.
Of the total US$600 million for 2020, “about US$240 million of that is development capex [capital expenditure] between City of Dreams Mediterranean and Studio City Phase 2 and that’s about equally split.”
At the under-construction City of Dreams Mediterranean casino resort in the Republic of Cyprus, the effects of the Covid-19 pandemic had put the project “a few months behind” mainly due to availability and mobility of labour.
“We’re hoping to keep it only a few months behind, but there has been some significant disruption just in terms of worker migration,” said Evan Winkler, the group’s president.
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